Main terms agreed for Bakun dam power purchase agreement (The Star)

KUCHING: Sarawak Energy Bhd (SEB) and Sarawak Hidro Sdn Bhd have reached an agreement on the main terms of the power purchase agreement (PPA) for electricity produced by Bakun hydro dam.

SEB chief executive officer Torstein Dale Sjotveit said the main terms included the tariff that SEB would have to pay to Sarawak Hidro, the dam developer.

Sjotveit declined to reveal the agreed tariff but reliable sources indicate it is likely to be somewhere “between SEB’s offer for a starting tariff of six sen per kwh and the request by Sarawak Hidro for seven sen per kwh”.

Sources also said the PPA terms would go through the Cabinet soon and was likely to be announced at the end of this month. The sources added that negotiations were still ongoing “on a few outstanding issues that require the attention of both the state and federal governments”.

Meanwhile, Sjotveit said SEB and Sarawak Hidro had been working with the Sarawak government (which owns SEB) and the Finance Ministry (which owns Sarawak Hidro) on the main terms of the PPA.

“All parties are working day and night. We will be able to sign the PPA, which will be for 30 years, next month,” he told StarBiz yesterday. The legal documents of the PPA are being prepared.

Sjotveit said the signing of the PPA was imperative to give security to SEB customers that the Bakun power was coming.

The 2,400MW Bakun dam is expected to commercially produce its first 300MW in July. Wet testing of the dam’s first of eight turbines will be carried out next month.

He said SEB’s Similajau sub-station, which was designed to handle more than 4,000MW, was completed last month and ready to receive power from Bakun.

SEB is now constructing a dedicated power sub-station in Samalaju, which will serve industries in Samalaju Industrial Park, Bintulu, within the Sarawak Corridor of Renewable Energy (SCORE). The sub-station is expected to be operational in June next year.

Last month, SEB sealed separate PPA term sheets with four major investors Press Metal, OM Materials, Asia Minerals Ltd and Tokuyama Corp. The four companies, which plan to invest some RM9.5bil, would require a combined 1,300MW to power their upcoming plants in Samalaju Industrial Park.

SEB has also signed a memorandum of understanding (MoU) with Smelter Asia Sdn Bhd, which needs more than 600MW to power its proposed US$1.6bil (RM4.8bil) aluminium smelter in Samalaju.

Smelter Asia is a joint venture between Gulf International Investment Group Holdings Sdn Bhd and Aluminium Corp of China.

Sjotveit said SEB was concluding PPA term sheets with three more SCORE investors which planned to invest close to RM3bil.

Together with the Sarawak State Planning Unit, SEB is also in discussions with close to 20 other potential SCORE customers. “We have more customers than the available power from Bakun,” he added.

Besides Bakun, the supply of electricity for industries in Samalaju Industrial Park will come from the proposed 944MW Murun dam currently under construction by SEB. The project is located upstream of Bakun dam in the upper Rejang River Basin in central Sarawak.

Sjotveit said SEB planned to build another coal-fired power plant with a 600MW installed capacity in Balingian, Mukah Division. The project is expected to come on stream by 2015 to beef up the supply of electricity to industries in SCORE.

SEB now owns and operates a 270MW coal-fired plant in Balingian and another 210MW coal-fired plant in Sejingkat, Kuching.

The Star (Friday May 13, 2011)

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Once the PPA for Bakun Dam has been finalised, we will be able to provide more certainty to our investors.

Coupled with the political stability of our State, a fair PPA would ensure Sarawak becomes an even more attractive investment location in the future.

With SCORE firmly in place within the next five years, Sarawak’s economy will look far different from what we see now.

There will be more jobs for our people and more business opportunities available for our SMIs and SMEs.